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The Silent Crisis: 68 MillionWithout Life Insurance

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According to LIMRA International, 68 million adult Americans have no life insurance. 68 million!

The number is so big, I called LIMRA to verify. That’s right, they said, 68 million.

Is there a silent crisis here, or what?

Let’s look deeper. As of August 2007, the U.S. Census Bureau estimated the country’s entire population to be nearly 302.5 million. Some 80+ million of that total represents young people, ages 19 and under, leaving roughly 220 million adults.

So, nearly a third–31%–of all American adults seemingly have no life insurance. (That percentage would be even higher if we omit adults age 65 and up.)

If one believes that life insurance is a financial security fundamental for most American adults, in their dying and in their living, then these numbers are worrisome, if not crisis-making. When untimely death occurs and there is no life insurance, the surviving family members (and business partners) suffer loss not only of the loved one but also of financial stability. The repercussions can be devastating.

Of course, some people believe life insurance is a waste of money. Others think it’s a “nice to have,” but only if affordable and only after fixed expenses are covered. People can get along just fine without it, they say. Even the presence of the newer living benefit features–which pay benefits while the insured is still alive–doesn’t seem to sway their opinion.

So, which camp is in the lead?

LIMRA’s most recent sales statistics show that life insurance premium and total face amount were both up in the 2nd quarter 2007, by 5% and 6%, respectively, over year-earlier figures. That’s positive news.

But the number of life policies sold actually fell by 1% in the same quarter, says LIMRA. In 2006, new policies sold also fell by 1% from year-earlier figures. This is definitely not positive news, especially in view of the 68 million adults who don’t have life insurance. It suggests that the life insurance naysayers are gaining ground.

A number of life insurance leaders are concerned about this. Some have been stumping the country, urging colleagues to apply brainpower to the situation. Some believe the solution is to increase efforts–and thus penetration–in the mid-market, a market that was largely overlooked by the high-net-worth stampede of the past decade.

This will not be easy, as there are fewer life insurance agents now than a decade ago. For instance, membership in National Association of Insurance and Financial Advisors is now around 60,000–15% fewer than 10 years ago, writes Warren Hersch in the Sept. 17, 2007 issue of National Underwriter.

Yes, many carriers also distribute through other channels today, but most industry executives still agree that fewer insurance feet are on the street. This is so despite the growth in the U.S. population. Consider: At the start of 1997, the U.S. population was nearly 266.5 million, according to Census Bureau estimates. Today, it’s 302.5 million, a 13.5% increase.

NAIFA is planning to grow its membership and attract younger advisors. If other industry groups and carriers do the same, that should help trigger a turnaround.

It’s doable, especially since the industry now has a flotilla of modernized products to present, many with strong mid-market appeal. (These include worksite as well as individual products.)

This commitment will need to be accompanied by a parallel commitment to expanded education about life insurance, aimed at advisors as well as the public. This will help newcomers get up to speed, and help the more experienced digest the new policy features and services.

As far as I know, no regulators or governmental bodies have gotten up in arms about the fact that so many American adults have no life insurance. This is even though such insurance, when well sold, will help ensure that surviving families will not have to go on welfare following the death of the insured breadwinner. This is even though such insurance, when it has living benefit features, means policy owners facing certain financial needs can access those benefits rather than lean on family, friends and community resources.

The fact that there is no public outcry doesn’t mean there is no crisis. It only means there is no public outcry. But it also means that the industry is the one that will need to bring the uninsured problem to light, and address it. That’s not bad. It’s good–because insurance experts know best how, where and why life insurance works.

It’s pointless to expect the day will come when 100% of American adults have life insurance. But it’s realistic to say that Americans would be better off if fewer than 68 million were uninsured for life insurance. This circles back to the problem, and invites the solution.

So, go on, own the problem. Then fix it.